818.51/977: Telegram
The Minister in Costa Rica (Scotten) to the Secretary of State
[Received April 20—1:55 a.m.]
195. Referring to the Department’s telegram 152, April 18, 7 p.m. The President on his own initiative sent his secretary to call upon me [apparent omission] that the President urged me to support Escalante’s request for financial assistance in Washington. The secretary in a state of considerable agitation which from his remarks appeared to reflect the President’s own state of mind asserted that failure to receive assistance from the American Government would result in the inability of this Government to meet the May 1st payrolls of its employees and that anything might happen as a result. He mentioned nothing about payment of the backlog which the Department states that Escalante stressed in his conversations. He stated that the President urgently desires a loan of 2 million dollars [Page 243] and is confident that if such a loan is granted no further assistance from the American Government will be necessary.
From what I have been able to learn it appears that President Calderón is faced with a serious although perhaps not dangerous political situation due to the somewhat precarious financial situation of the Government but also to the widespread accusations of graft and mismanagement which are being almost daily directed against him and especially against his brother, the Minister of the Interior. While it is not practicable in this telegram to review in detail the financial position of the Government one indication of the situation is that I learn on good authority that the Government has reached its legal limit of borrowing in the bank of Costa Rica as the bank has already loaned the Government 2,300,000 colones on its current account and may not legally allow the Government to overdraw further.
It does not appear that Volio’s activities are responsible for this situation and in fact I learn that although he is a loyal friend of President Calderón and would probably not be willing to lead any movement against him, he resigned partly as a protest against dishonesty and mismanagement in the present administration.
While the financial difficulties of the Government are of course partially due to the drop in bases of revenues caused by the war, governmental mismanagement appears to have produced a large part.
On the other hand President Calderón has as the Department is well aware, cooperated with us to the fullest extent as regards the international situation and is I believe a sincere friend of the United States. Although I am not convinced that the failure of our Government to extend financial help to Costa Rica at this time would lead to the overthrow of Calderón’s Government he would undoubtedly be placed in a very difficult situation and his attitude toward the United States would probably be considerably cooler and less cooperative than at Bern.
After taking into consideration the various political factors involved I would suggest that this Government be granted financial assistance in whatever form and amount the Department decides in order to tide over their immediate financial difficulties and keep President Calderón in a friendly frame of mind.